Closing the corporate inversion loophole?

An influential U.S. senator plans legislation aimed at closing a tax loophole that could affect corporate deals like Pfizer’s pursuit of AstraZeneca.

Sen. Carl Levin, D-Mich., took aim Thursday at corporate inversions — a process in which a company re-incorporates in a lower-tax nation overseas while keeping its management operations in the U.S.

“Companies that exploit this loophole benefit from the protections and services the federal government provides, including patent protection, research and development tax credits, national security and more,” said Levin, who added he would introduce correcting legislation soon. “They shouldn’t be allowed to shift their tax burden onto others.”

As chair of the Senate Permanent Subcommittee on Investigations, Levin has long focused on corporate tax issues. He questioned Apple CEO Tim Cook last year over the panel’s report that showed the tech giant avoided tens of billions of dollars in U.S. taxes on its income by shifting the funds through a global web of offshore entities.

It’s far from certain that any legislation planned by Levin would be approved by the Democratic-majority Senate, much less the GOP-controlled House. Some lawmakers from both major parties, joined by Cook and other corporate CEOs, have argued that what’s really needed is a major U.S. tax system overhaul.

Pfizer’s plans sparked new focus on corporate inversion because the New York-based pharmaceutical giant wants to acquire rival AstraZeneca, a British-Swedish multinational headquartered in London. The deal, in which Pfizer would retain its management in the U.S., could lower the drugmaker’s corporate tax bill.

AstraZeneca last week rejected a sweetened offer of $106 billion from Pfizer, terming the bid inadequate and contending it substantially undervalued the company.

The Wall Street Journalreported Thursday that one of AstraZeneca’s top 20 shareholders said there would be a good case for negotiations if Pfizer either upped its last offer or took the takeover bid hostile.

AstraZeneca shares were up less than 1% at $78.93 in afternoon trading.